Abstract/Description

The impact of the prolonged freeze in EU sugar prices on the economies of ACP...

Notes

The impact of the prolonged freeze in EU sugar prices on the economies of ACP sugar suppliers was noted with concern by ACP Ministers at their June 2002 meeting in the Dominican Republic. They called on the EU to:
recommend ways to more effectively share the burden imposed by the introduction of improved access for least-developed country sugar suppliers under the EBA;
examine the possibility of increasing the market access granted to ACP suppliers in the light of the enlargement of the EU.
Comment:
The freeze in the EU sugar price has been exacerbated by the decline in the value of the Euro against the US$. This has been a particular problem for Caribbean sugar suppliers whose principal imports are all US$ denominated. The current recovery in the value of the Euro vis-à-vis the US$ (now almost at 1:1 parity) should improve US$ denominated earnings on Caribbean sugar exports to the EU.
Of more serious concern in the long term however are the current European Commission proposals for 'the introduction of a decoupled system of payments per farm', which ultimately would be extended to a reformed sugar sector. Under this scenario EU sugar prices would drop dramatically to around world market price levels. The proposals being put forward in the rice sector, involving a one-off 50% reduction in the EU rice price are indicative of how dramatic the price effects of such a reform process can be.
ACP sugar suppliers will have to consider carefully how they could respond to this type of trajectory for the future of the EU sugar regime and will need to monitor carefully the current EU Council discussions on the Commission's proposals for the mid-term review of the CAP.